Japan’s economy declines 2 percent, exceeding forecasts of 1.5 percent


(MENAFN) Preliminary data released on Thursday revealed that the Japanese economy experienced a contraction at an annual rate of 2 percent during the first quarter of 2024, marking a concerning trend for the nation's economic outlook. This figure, while anticipated by markets and economists to some extent, exceeded earlier forecasts of a milder contraction of 1.5 percent.

Of particular significance is the downturn in private consumption, which represents the largest component of Japan's Gross Domestic Product (GDP). Private consumption fell by an annualized rate of 2.7 percent, signaling a significant reduction in consumer spending during the period under review. Additionally, corporate investment recorded a notable decline of 3.2 percent, suggesting subdued business sentiment and reluctance to invest in expansion or development projects.

The downturn in Japan's economic performance is further underscored by declines in both exports and imports. Exports, a crucial driver of the country's economy, experienced a substantial drop of 18.7 percent, reflecting challenges in global demand and trade dynamics. Meanwhile, imports also registered a decline of 12.8 percent, highlighting a broader slowdown in domestic economic activity and demand for foreign goods and services.

This contraction in the first quarter follows a modest expansion of 0.4 percent recorded in the final quarter of 2023, which itself came after a more pronounced contraction of 2.9 percent in the third quarter of the same year. The persistent volatility and fluctuations in Japan's economic performance underscore the challenges facing policymakers as they seek to navigate through uncertain global economic conditions and internal structural issues.

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